Your Basic Crypto Questions Answered
Cryptocurrency is quickly blooming to become a rather large industry, but it is also attracting new customers every day! No matter how new you are, we are glad that you are here and we are ready to help you to get a grasp on the basics.
So, before you feel like you are too overwhelmed, take a moment to read this blog article which will answer your basic questions about crypto.
1. How Many Cryptocurrencies Are There?
Currently, there are thousands of cryptocurrencies in existence, and they aren’t all created equal. Every day, new cryptocurrencies join the market, and others are confirmed to be scams. If you are new to cryptocurrency, we recommend focusing less on the number of cryptocurrencies there are and instead just look into either Bitcoin or Ethereum to keep it simple.
2. Is Buying Bitcoin Gambling?
Buying Bitcoin is a little like gambling, but it isn’t actually gambling; rather, it is considered a risky investment. Bitcoin has now been around for over 15 years, so we are reasonably sure it isn’t going away. That being said, there is no guarantee you will earn money by holding or investing in Bitcoin, so it is considered a high-risk investment.
3. What is Bitcoin Mining?
Bitcoin mining is a unique process that is used to create new Bitcoin. Despite what the word mining insinuates, there aren’t actually individuals digging for Bitcoin. Rather, Bitcoin mining entails solving complicated mathematical problems with an advanced computer. Learn more about it when you read our article How to Mine Bitcoin.
4. What is the Difference Between Bitcoin and NFTs?
Bitcoin is a fungible token, which means it has an established value and can be exchanged for other Bitcoin tokens on a 1:1 basis. NFTs, on the other hand, are non-fungible, and each NFT has a unique value, meaning they cannot just be exchanged for one another.
5. Are NFTs Worth Buying?
Buying NFTs is considered to be even more risky than buying Bitcoin. That being said, NFTs are being created to represent some of the most famous works of digital art. So, if you currently spend your money buying physical art, it may be worth it for you to purchase an NFT. We don’t recommend buying NFTs to those who are just looking for an investment vehicle, though, because NFTs are difficult positions to close and liquidate.
6. Who Controls Bitcoin?
Bitcoin isn’t controlled by any single entity, which means it is decentralized. Technically, the miners who use their computers and software to mine Bitcoin have a small say in the future of the currency. That being said, they still do not own Bitcoin, and when miners have had disagreements about Bitcoin’s future in the past, it has caused the token to fork, leading to the creation of BitcoinCash.
7. Do You Need a Crypto Wallet to Buy Crypto?
You need a cryptocurrency wallet in order to buy crypto. That being said, most cryptocurrency purchasing platforms (i.e., Coinbase or Binance) provide all users with a software wallet. These wallets are also called hot wallets, and they aren’t considered to be safe places to store your cryptocurrency. Those looking for a safe cryptocurrency wallet should choose to use the Trezor or Ledger, both of which are digital wallets.
8. What is the Best Bitcoin Wallet?
In our opinion, the best wallet for Bitcoin is any cold wallet. This includes the Trezor and Ledger brand wallets. Both of these can be purchased online and set up at home.
9. Is Cryptocurrency Traceable?
There is a myth circulating that cryptocurrency is completely untraceable, and this isn’t necessarily true. While cryptocurrency is more difficult to trace than other forms of digital currency (such as using your bank card), it isn’t completely untraceable as all transactions are recorded in a public, digital ledger. There are some cryptocurrencies that are considered to be more private, such as Monero, but no cryptocurrency is truly untraceable.
10. Are Cryptocurrencies Safe?
In general, cryptocurrencies are much safer than using fiat cash and even your bank card, as it is nearly impossible to guess the 20-word seed that protects your cryptocurrency. That being said, there are a lot of cryptocurrencies out there that are scams, meaning you can lose everything.
To safely invest in cryptocurrency, we recommend only investing in well-known projects like Bitcoin, Ethereum, and Solana, as these projects have proven themselves not to be scams. While this doesn’t mean you will 100% make money with these projects, we know they aren’t scams, and that is something.
11. Where is the Best Place to Buy Bitcoin?
The answer to this question depends on your technological knowledge and how you plan to purchase your Bitcoin. For individuals in America who are new to crypto, it’s best to use a program like Coinbase or Kraken, which will allow you to buy crypto with USD. Both platforms are very user-friendly though the fees to buy and sell can be quite high.
If you have lots of friends who invest in Bitcoin, then you can buy directly from them. Just ensure you verify their prices with an exchange to ensure you are getting a good deal. You will likely need to pay them in cash, or using a tool like Venmo or PayPal.
12. What Is So Risky About Crypto?
Although everything might sound fine and dandy so far, remember that buying cryptocurrency is extremely risky. Cryptocurrencies are very volatile, and you can lose a huge portion of your investment instantly. Additionally, if you choose the wrong software wallet or share your keys with the wrong person, your cryptocurrency can be stolen or hacked.
It is also worth mentioning that most cryptocurrencies operate in legal gray areas. Meaning they aren’t illegal, but they aren’t legal either. This can change at any moment, causing you to lose access to your cryptocurrency.
We hope that this list has helped you to understand the basics of cryptocurrency a little bit better! Don’t forget to follow our blog where we post new information about all sorts of things having to do with crypto on a regular basis!
